iMoD is a new display technology created by Iridigm targeted at palmtop devices. but theoretically applicable anywhere. iMoD works by lightwave interference (the same way butterfly wings do). Light hitting the iMoD surface enters little metal bubble-wrap like structures in which the interference occurs. Different "bubble-wrap" pocket depths make different colors (the depth is equal to the wavelength of the desired color).
A voltage applied to both sides of the pockets causes them to close up and absorb light rather than reflect it. These pockets also have the interesting property that they retain the last state that they were in, so that voltage only needs to be applied to change the display.
Of course, this means that each iMoD "pixel" is only capable of two states. However, iMoD pixels are so small (up to 1000 pixels per inch) that dozens of them are hooked together to form one actual pixel.
Because iMoD doesn't use polarization (like LCDs do), reflected light is very bright and looks remarkably "real", and doesn't need to use any power for lighting (unless it's dark outside). A typical iMoD setup (with a touchscreen) usually needs about four times less space than the same LCD setup. iMoD can also be manufactured for much less cost than LCDs with similar equipment.
Most of this information is taken from Iridigm's web site (http://www.iridigm.com). The rest is my intuition - /msg me if it's wrong!